Rising Real Estate Star: Shenzhen's Cross Border Tycoon

Chen Hong Tian. “Many people think I am mysterious. But people close to me know I am not mysterious at all.” Credit: Virgile Simon Bertrand For Forbes

The blurring of commercial lines between Hong Kong and southern China is personified in the wheeling and dealing of Chen Hong Tian. At age 57, following two decades of real estate and financial activity out of Shenzhen, he is gaining new visibility in the great metropolis nearby that revolves around those two sectors.

In Hong Kong, his home since 1991, he can boast the accoutrements of tycoon status, flying in his Bombardier Challenger, driving his Rolls-Royce sedan and acquiring a Peak parcel on Gough Hill Road for a record HK$2.1 billion ($271 million)--as a teardown.

The Foshan, Guangdong native holds at least six Shenzhen-area commercial properties plus other land parcels in what is now the mainland's most prosperous city. Nearby in Zhuhai he owns three commercial buildings. A good reflection of his status is the ranks of entrepreneurs with whom he hobnobs in Shenzhen's government-sponsored Harmony Club, which he cofounded and chairs.

But it's his turn to the greater exposure of Hong Kong that is the news in Chen's story. Before the Peak buy, he invested in 2013 in his first Hong Kong-listed company, China South City Holdings, obtaining a 14% stake, the second largest, in the regional logistics facilitator. Including extra shares in his son's name, he put in HK$2 billion but declined to take a board seat. The company's two founding brothers continue to run the show.

Then, this August, he parted with HK$4.5 billion for the East Tower of One HarbourGate, an 18-story office and 2-story retail complex in Hung Hom on the Kowloon waterfront that he will use as a Hong Kong operations base. His longtime chum and ping-pong partner, Francis Choi, the world's biggest toymaker and a Hong Kong real estate investor, connected him with the sellers, Wheelock & Co.

Chen's Pearl River Delta property inventory doesn't reflect his churn of residential sites, which he sees as more suited to short-term ownership. Nor does it take into account his less-measurable involvement as an investor in, and shadow-financier of, closely held Chinese concerns. "I did not invest in a listed company before China South City because so many unlisted companies are more successful than listed companies, especially in China. Such companies are everywhere," he says.

Under the umbrella of his private Cheung Kei Group, which claims net assets of 20 billion yuan (over $3 billion), Chen has property stakes, a quiet-if-active trading operation in global equities and bonds out of Hong Kong and possible multiple investments in Chinese businesses. FORBES ASIA was able to track holdings of Chen Family Assets Management, founded in 2007 by him and his wife, and determined they include an environmental technology firm in Inner Mongolia, a biotech startup in Shanghai, a mining company in western Hunan, a fish farm in Hubei and a health food manufacturer in Anhui. A Laotian iron-ore mine bought in 2011 was sold in January to a Hong Kong-listed company.

"Many people think I am mysterious. But people close to me know I am not mysterious at all," Chen says from the Cheung Kei headquarters in offices next to a golf course in Shenzhen's central business district, a ten-minute ride from the Hong Kong border. The company name denotes "forever lasting" in Cantonese, his native tongue. He bought the entire building, formerly the China Minsheng Bank Building, for 830 million yuan in 2013.

"We have a special business development model. We are a private investment company, not a typical brick-and-mortar business. We provide direct financing to companies [in China]," he says, his left hand sporting a glittering diamond ring. "Normal outsiders cannot get a clear look."

These are typically pre-IPO private-placements taking no more than 5% of listed companies, the trigger for disclosure, as he maneuvers to avoid public attention. "You won't see the names of our companies. You'll see the names of other companies, but the real owners are behind the scenes," he says.

Chen also provides capital for projects by other developers. The property deals require significant cash and low gearing, so his role can be vital. He says he walks away when things get better--or ugly.

From the start, his path to privilege was unconventional. He arrived in Shenzhen in 1984, hired by a state-owned textile exporter-importer as a fashion tailor and dressmaker, a craft he had taught himself at age 20. He would make a fitful go at trading and textile manufacturing before Deng Xiaoping's 1992 tour jump-started the special economic zone.

Chen’s HK$387 million apartment in the Opus building, designed by Frank Gehry, turned out to be too small for his family. He bought a parcel nearby for HK$2.1 billion, where he’ll build a mansion. Credit: PHILIPPE LOPEZ/AFP/Getty Images

Soon real estate, or rather the development of rural farmland, was the talk of the town. "There were just a handful of private real estate developers active in Shenzhen," he recalls. Those still operating today include Shenzhen Galaxy Real Estate and Shenzhen Yitian.

China Vanke came into the game soon afterward and would go on to become the city's biggest developer. Emerging later was the Baoneng Group, headed by Chen's friend Yao Zhenhua, who of late has scooped up 25% of Vanke in an epic takeover battle. Chen, who says he amassed capital from unspecified land dealings, sold his first major project--the Cheung Kei Garden, a nine-building gated community of 490 households--to Shenzhen home buyers in 1997.

Rather than develop it outright, Chen bought the property new from a local builder, Shahe Industrial. "Our approach to real estate is mainly financial. We have not participated in the full course of the development phase for most of our projects," he says. The reason, he explains: "I felt the government did not like real estate developers, and the public also did not like developers. But I think [developing real estate] is a pure market behavior."

In the following two decades his Shenzhen company has publicly launched, if not developed, at least 11 major residential projects; as early as 2002 it was big enough to be ranked as the No. 4 developer, based on the number of projects, by the Shenzhen government's Municipal Planning & Land Information Center.

But housing is not what he wants to hang on to. "You cannot hold residential properties for too long--there are tax implications," he says. (The Chinese government has heavy levies on residential property holdings.) He places his long-term bets on commercial buildings. The sites in Shenzhen and nearby have a total of one million square meters; top properties carry the Cheung Kei name.

But when a property calls for flipping, Chen will do it. He says he spent 1.6 billion yuan in April buying 80% of a hotel in Guangzhou, only to unload it a few months later for an undisclosed price.

Even his purchase on the Peak in June involved horse trading. Chen paid the seller, his friend Alan Chuang's Hong Kong-listed Chuang's Consortium International, 80% in cash and the remaining 20% with a three-floor retail space in a commercial building near Hong Kong in Shenzhen's Lo Wu district carrying an appraised value of HK$420 million.

Chen says he realized that the HK$387 million flat he bought not long ago in Opus, an apartment tower also on the Peak and starchitect Frank Gehry's first Asian residential project, would be too small for a family of five (his wife and three sons, the oldest of whom, Vincent, 31, a graduate of Cornell, assists him in overseas investments).

In two years Chen plans to build a new home on the Gough Hill Road site, designed by himself in grand French Baroque style, with high ceilings and gilded notes--like houses he has elsewhere, he says.

It's the showy payoff for a man who made his big money largely out of view through a combination of intuition, deal smarts, timing and who-knows-what-all connections. One big bet: "I reckoned Shenzhen prices would rise sharply."

He reckoned right.

I cover regional corporates and entrepreneurs for Forbes Asia magazine as a contributing correspondent. Previously, I was a staff writer with Forbes, producing stories for its global website and magazines that covered a wide spectrum of regional topics.